Financial Statements Summary for the Nine Months Ended ... · (2) Application of accounting methods...

This translation is to be used solely as a reference and the consolidated financial statements in this release are unaudited.

Financial Statements Summary for the Nine Months Ended December 31, 2010 [ Japan GAAP ] January 24, 2011

Company Name KDDI CORPORATION Stock Listing Tokyo Stock Exchange-First Section Code No. 9433 URL http://www.kddi.comRepresentative Takashi Tanaka, President

Scheduled date for filing of quarterly report January 31, 2011

Scheduled date for dividend payment －

Quarterly earnings supplementary explanatory documents: Yes

Quarterly earnings presentation: Yes (for institutional investors and analysts) (Amount Unit : Millions of yen, unless otherwise stated) (Amounts are rounded down to nearest million yen)

1. Consolidated Financial Results for the Nine Months Ended December 31, 2010 (April 1, 2010 – December 31, 2010) (1) Consolidated Results of Operation （Percentage represents comparison change to the corresponding previous quarterly period）

Operating Revenues Operating Income Ordinary Income Net Income % % % %

Nine months ended December 31, 2010 2,571,856 (0.5) 372,050 (1.3) 349,672 (3.6) 202,641 (4.7)Nine months ended December 31, 2009 2,585,307 (1.7) 376,812 (7.4) 362,826 (10.6) 212,645 (16.3)

Net Income per Share Diluted Net Income per Share Yen Yen

Nine months ended December 31, 2010 45,715.52 － Nine months ended December 31, 2009 47,741.41 －

(2) Consolidated Financial Position

Total Assets Net Assets Equity Ratio Total Net Assets per Share

% YenAs of December 31, 2010 3,741,567 2,126,689 55.1 482,831.85As of March 31, 2010 3,819,536 2,078,450 52.8 453,003.09(Reference) Shareholder’s Equity As of December 31, 2010: 2,060,979 million yen As of March 31, 2010: 2,017,726 million yen

2. Dividends Dividends per Share

1stQuarter End 2nd Quarter End 3rd Quarter End Fiscal Year End Total Yen Yen Yen Yen Yen

Year ended March 31, 2010 － 6,500.00 － 6,500.00 13,000.00Year ending March 31, 2011 － 6,500.00 － Year ending March 31, 2011 (forecast) 6,500.00 13,000.00Note: Changes in forecasts during the three months ended December 31, 2010: None

3. Consolidated Financial Results Forecast for Year Ending March 31, 2011 (April 1, 2010 – March 31, 2011) （Percentage represents comparison to previous fiscal year）

Operating Revenues Operating Income Ordinary Income Net Income Net Income per Share

% % % % YenEntire Fiscal Year 3,440,000 (0.1) 445,000 0.3 420,000 (0.7) 240,000 12.8 56,225.52Note: Changes in forecasts during the three months ended December 31, 2010: None

http://www.kddi.com/

4. Other (Please refer to P.9 “Others” for details.) (1) Changes in significant consolidated subsidiaries during the nine months ended December 31, 2010 : None (2) Application of accounting methods which are simplified or exceptional for quarterly consolidated financial

statements : Yes (3) Changes in significant accounting policies, procedures and presentation

1) Changes resulting from the revision of the accounting standards and other regulations : Yes 2) Others : None Note: Items to be disclosed in “Significant Changes in the Basis of Presenting Quarterly Consolidated Financial

Statements” (4) Numbers of Outstanding Shares (common shares)

As of December 31, 2010 4,484,8181) Number of shares outstanding (inclusive of treasury stock) As of March 31,2010 4,484,818As of December 31, 2010 216,2942) Number of treasury stock As of March 31,2010 30,705

For the nine months ended December 31, 2010 4,432,6683) Number of weighted average common shares outstanding (cumulative for all quarters) For the nine months ended December 31, 2009 4,454,113

Indication of quarterly review procedure implementation statusThis quarterly earnings report is exempt from quarterly review procedure based upon the Financial Instruments and Exchange Act. It is under the review procedure process at the time of disclosure of this report. Explanation for Appropriate Use of Forecasts and Other NotesThe forward-looking statements such as operational forecasts contained in this statements summary are based on the information currently available to KDDI and certain assumptions which are regarded as legitimate. Large discrepancies may be seen in the actual results due to various factors. Please refer to P.8 “Qualitative Information on Consolidated Operating Results Forecast” of the Attachment for the assumptions used and other notes.

【the Attachment】

Index of the Attachment

1. Qualitative Information / Consolidated Financial Statements, etc. ................................................................. 2

(1) Qualitative Information on Consolidated Operating Results ................................................................... 2

(2) Qualitative Information on Consolidated Financial Position ................................................................... 8

(3) Qualitative Information on Consolidated Operating Results Forecast ..................................................... 8

2. Others ............................................................................................................................................................. 9

(1) Changes in Significant Consolidated Subsidiaries .................................................................................. 9

(2) Application of Accounting Methods which are Simplified or Exceptional for Consolidated Financial Statements .................................................................................................... 9

(3) Outline of Changes in Significant Accounting Policies, Procedures and Presentation .......................... 10

3. Consolidated Financial Statements ................................................................................................................. 11

(1) Consolidated Balance Sheets .................................................................................................................. 11

(2) Consolidated Statements of Income ........................................................................................................ 13

（For the nine months ended December 31, 2010） .................................................................................. 13

（For the three months ended December 31, 2010） ................................................................................. 15

(3) Consolidated Statements of Cash Flows ................................................................................................. 16

(4) Going Concern Assumption .................................................................................................................... 18

(5) Segment Information .............................................................................................................................. 18

(6) Material Changes in Shareholders’ Equity ............................................................................................. 20

* KDDI Corporation holds an earnings presentation for investors as below. Documents distributed at the presentation are scheduled to be posted on our website at the same time as the release of the financial statements summary. Videos and main Q&As are planned to be posted immediately after the presentation.

- Monday, January 24, 2011- Earnings presentation for institutional investors and analysts

* In addition to the above earnings presentation, KDDI Corporation holds conferences on its business and results for individual investors. Please check our website for the schedule and details.

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1. Qualitative Information / Consolidated Financial Statements, etc. (1) Qualitative Information on Consolidated Operating Results

1) Results Overview For the nine months ended December 31, 2010 (Amount unit: Millions of yen)

Nine months endedDecember 31, 2009

Nine months ended December 31, 2010

Increase (Decrease)

Increase (Decrease)%

Operating Revenues 2,585,307 2,571,856 (13,451) (0.5) Operating Expenses 2,208,494 2,199,806 (8,688) (0.4)Operating Income 376,812 372,050 (4,762) (1.3)Non-operating Income (Expense) (13,986) (22,377) (8,391) －

Ordinary Income 362,826 349,672 (13,153) (3.6)Extraordinary Profit (Loss) 3,605 5,930 2,325 64.5Income before Income Taxes and Minority Interests

366,432 355,603 (10,828) (3.0)

Income Taxes 149,558 146,890 (2,668) (1.8)Income before Minority Interests － 208,713 －－

Minority Interests in Income 4,227 6,071 1,843 43.6Net Income 212,645 202,641 (10,003) (4.7)

For the three months ended December 31, 2010 (Amount unit: Millions of yen)

Three months endedDecember 31, 2009


Increase (Decrease)

Increase (Decrease)%

Operating Revenues 862,220 853,418 (8,801) (1.0) Operating Expenses 736,390 729,224 (7,166) (1.0)Operating Income 125,829 124,194 (1,635) (1.3)Non-operating Income (Expense) (4,514) (8,563) (4,049) －

Ordinary Income 121,315 115,630 (5,684) (4.7)Extraordinary Profit (Loss) (2,055) 554 2,609 －

Income before Income Taxes and Minority Interests

119,260 116,185 (3,074) (2.6)

Income Taxes 50,391 48,363 (2,027) (4.0)Income before Minority Interests － 67,822 －－

Minority Interests in Income 1,515 2,154 639 42.2Net Income 67,353 65,667 (1,686) (2.5)

Operating revenues in the nine months ended December 31, 2010 amounted to ¥2,571,856 million, down 0.5% year on year, mainly due to the decline in voice ARPU (Average Revenue per Unit) in the Mobile Business, despite the increase in revenues in the Fixed-line Business, brought by rise in revenues of group companies. Despite the decline in operating expenses in the Fixed-line Business, operating income dropped 1.3% year on year to ¥372,050million. Ordinary income declined 3.6 % year on year, to ¥349,672 million. Net income was down 4.7% year on year, to ¥202,641 million. Operating revenues in the three months ended December 31, 2010 amounted to ¥853,418 million, down 1.0% year on year. Contributing factors included the decline in voice ARPU in the Mobile Business. Operating expenses declined year on year as a result of decreased operating expenses of KDDI Corporation in the Fixed-line Business. However, Operating income decreased 1.3% year on year to ¥124,194 million, ordinary income decreased 4.7% year on year to ¥115,630 million, and net income was down 2.5% year on year to ¥65,667 million. Overview of Economic Conditions The global economy has shown a slow recovery led by fiscal policies including expansion of government spending and tax reduction. However, risks for stagnation of economic recovery and influences from the change in fiscal policies of nations are anticipated due to credit crunches and continuation of high unemployment rate. Increases in Japanese export and production have lost momentum. Growth effects brought by economic stimulus packages such as the government subsidies for purchase of fuel-efficient vehicles and electricity -efficient consumer electronics disappeared. In addition, rush in purchase before the termination of such

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stimulus packages brought drop in consumer spending. Such factors led stagnation of Japanese economy, which had shown the sign of recovery.

Industry Trends In the mobile telecommunications market, competitions for customers is intensifying further in such areas as handset variety including smartphones, tablet-type terminals and ebooks terminals, as well as provisions of music, video, ebooks, and other contents services. In the fixed-line market, the expansion of broadband services centered on FTTH is accompanied by an ongoing convergence of fixed-line and mobile telecommunication, as well as telecommunications and broadcasting. As a result, competition of services is entering a new phase.

KDDI's Position In the Mobile Business, KDDI Corporation and its group companies (hereafter: “the Group”) worked to enhance services targeting individual and corporate clients in order to meet diversifying customer needs by developing and launching an enhanced lineup of terminals, including smartphones, digital photo frames, ebooks terminals and mobile Wi-Fi routers, as well as formulating and offering new pricing plans. In the Fixed-line Business, the Group worked to enhance ease of use for its services and expand access lines centering on FTTH. The Group has offered more solutions services for corporate clients, while striving to bolster its systems that support corporate clients’ business development by increasing its overseas locations. Moreover, the Group also promoted partnership with many companies in various areas in both Mobile Business and Fixed-line Business. 2) Results by Business Segment - Results Summary For the nine months ended December 31, 2010 (Amount unit: Millions of yen)


Nine months ended December 31, 2010

Increase (Decrease)

Increase (Decrease) %

Mobile Business Operating Revenues 2,001,379 1,952,327 (49,052) (2.5)Operating Expenses 1,593,468 1,592,724 (744) (0.0) Operating Income 407,911 359,603 (48,308) (11.8)

Fixed-line Business Operating Revenues 623,759 660,032 36,273 5.8Operating Expenses 658,551 653,193 (5,357) (0.8) Operating Income (Loss) (34,791) 6,838 41,630 －

Other Business Operating Revenues 75,093 84,044 8,951 11.9Operating Expenses 71,992 78,716 6,724 9.3 Operating Income 3,100 5,328 2,227 71.8

For the three months ended December 31, 2010 (Amount unit: Millions of yen)



Increase (Decrease)


Mobile Business Operating Revenues 663,505 647,171 (16,333) (2.5)Operating Expenses 527,628 535,233 7,605 1.4 Operating Income 135,876 111,937 (23,939) (17.6)

Fixed-line Business Operating Revenues 208,905 221,548 12,642 6.1Operating Expenses 221,379 211,040 (10,338) (4.7) Operating Income (Loss) (12,473) 10,507 22,981 －

Other Business Operating Revenues 32,410 26,566 (5,844) (18.0)Operating Expenses 30,241 24,841 (5,400) (17.9) Operating Income 2,169 1,725 (444) (20.5)

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Note: From the three months ended June 30, 2010, the Group began applying the “Revised Accounting Standard for Disclosures about Segments of an Enterprise and Related information” (ASBJ Statement No. 17 of March 27, 2009) and “Guidance on Accounting Standard for Segment Information Disclosures” (ASBJ Guidance No. 20 of March 21, 2008). We have conducted comparisons with the previous year as the impact on the Group’s consolidated financial statements for the three months ended on December 31, 2010, as a result of this change was negligible.

- Total Subscriptions (Unit : Thousand line)

As of December 31, 2009

As of December 31, 2010

Increase (Decrease)


au1 31,393 32,527 1,134 3.6 CDMA 1X WIN 25,149 28,716 3,567 14.2(Ref.) UQ WiMAX 64 524 460 718.8FTTH 1,426 1,833 407 28.5Metal-plus 2,927 2,622 (305) (10.4)Cable-plus phone 871 1,250 379 43.5CATV2 913 1,065 152 16.6Fixed access lines3 5,813 6,326 513 8.8

Notes: 1. Inclusive of module-type contracts 2. Number of households with at least one contract via broadcasting, internet, or telephone 3. Total access lines of FTTH, direct-revenue telephony (Metal-plus, Cable-plus phone), and CATV subs.

excluding crossover.

Mobile Business Operating revenues for the nine months ended December 31, 2010 amounted to ¥1,952,327 million, down 2.5% year on year. Contributing factors include the decrease in voice ARPU (Average Revenue per Unit) caused by the uptake of the Simple Course. Even though average cost of sales commission per terminal reduced, increase in the number of terminal sales made the overall operating expense to remain the same, and operating income decreased 11.8% year on year to ¥359,603 million. Operating revenues for the three months ended December 31, 2010 amounted to ¥647,171 million, down 2.5% year on year. Contributing factors included the decrease in voice ARPU caused by the uptake of the Simple Course. Even though average cost of sales commission per terminal reduced, increase in the number of terminal sales made the overall operating expense to increase slightly, and operating income decreased 17.6% year on year to ¥111,937 million.

Overall ・ The number of “au” mobile phone subscriptions was 32.527 million as of December 31, 2010. ・ The Group adopted “EV-DO Multi-Carrier” as the data communication infrastructure for au mobile phones and

introduced “WIN HIGH SPEED,” the expanded system that allows 9.2 Mbps downlink and 5.5 Mbps uplink speed at maximum from November 5, 2010. [1] Compared to the current “EV-DO Rev.A,” where one mobile phone uses one carrier, the speed triples at maximum [1] [2]. [1] Applicable in the areas that support 9.2Mbps downlink (5.5Mbps uplink) speed at maximum. It is the best effort

method service. The speed mentioned is the maximum speed by technical standard and does not show the actual usage speed. The speed may slow down significantly depending on the communication environment and traffic status.

[2] "EV-DO Rev.A" 3.1Mbps downlink/1.8Mbps uplink speed maximum. "WIN HIGH SPEED" 9.2Mbps downlink/5.5Mbps uplink speed maximum.

Mobile Terminals ・ Under the “au” brand, the Group released “IS03,” a smartphone featuring AndroidTM 2.1 OS that encompasses

functions of smartphones and existent Japanese mobile phones simultaneously, on November 26, 2010[1], and “SIRIUSα IS06,” a global standard model featuring the latest AndroidTM OS 2.2, or “Froyo,” on December 23, 2010. The Group plans to launch “REGZA Phone IS04,” a water-proof model that features standard functions common in Japan and high-quality videos, and “IS05,” a handy-size model for female users featuring communication functions. As for existent au mobile phone models, the Group released “EXILIM-Keitai CA006,” “G'zOne TYPE-X,” “AQUOS SHOT SH010,” “BRAVIA® Phone S005,” “T005,” “SH009,” “URBANO MOND,” and “K006 without camera.” The Group plans to release six models; “Cyber-shotTM phone S006,” “Simple Phone K008,” “T006,” “SH011,”

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“K007,” “PT002.” As in the case of 2010 summer models, all the models are water-proof. Note: Update to Android™2.2 is planned in spring, 2011.

・ Under the “iida” brand, the Group launched “X-RAY” and three items of “LIFESTYLE PRODUCTS” for “X-RAY,” produced by popular designer Tokujin Yoshioka. The Group plans to introduce “G11,” a succeeding model of “G9” and five items of “LIFESTYLE PRODUCTS.” The Group also announced three concept models created in collaboration with an internationally popular Italian design company “ALESSI.”

・ The Group released “biblio Leaf SP02,” a model specialized for downloading, storing and reading ebooks, on December 25, 2010, and “Wi-Fi WALKER DATA05,” the first au mobile router, on December 10, 2010. The Group also introduced “NEX-fi,” a mobile wireless LAN Terminal by Ideacross Inc. on December 23, 2010. In addition, “TW317A7,” an 11.6-inch slate PC featuring Windows® 7 Home Premium and 2GB memory by Onkyo Corporation, was introduced to be used along with “DATA01” and “Wi-Fi WALKER DATA05.” Both “NEX-fi” and “TW317A7” can be purchased at au shops and PiPit.

Pricing Plans ・ The Group introduced “IS Flat,” a new packet flat-rate service that allows customers to enjoy web services

available with smartphones more reasonably and “Maitsuki Discount (monthly discount),” a service where a fixed amount of discount is subtracted from monthly charge to allow customers to purchase smartphones at a reasonable price, on November 26, 2010.

・ The Group introduced “biblio Leaf Plan,” a packet flat-rate service that allows users to search and download e-book contents for “biblio Leaf SP02” at a basic fee without worrying about additional charges on December 25, 2010.

・ The Group introduced “Global data communication card Rental service,” which offers a flat-rate service combining a rental service of a communication device and a packet flat-rate service to allow users casually adopt data communications overseas on October 13, 2010. The pricing starts from 980 yen per day. [1] [1] For a USB model.

Corporate Services ・ KDDI Corporation and Skype™ announced a strategic alliance that will integrate Skype™ across the Group's

services on October 18, 2010. The two parties will offer Skype™ on the Group’s various services in addition to its “au” mobile phones. “Skype™｜au,” an application that allows voice calls and instant messaging on au smartphones featuring Android™ OS, has been offered from November 26, 2010. “Skype™｜au,” uses au's mobile phone network, enabling customers to enjoy stable voice calls with Skype users around the world with the quality and easy usage of mobile phones. The application will be available for au mobile phones featuring BREW® from 2011 to expand the range of the service.

・ The Group and Jibe Mobile K.K. launched Social Address Book Service “jibe” for au smartphone on November 26, 2010. “jibe” is an application which brings 16 services and media sites into one platform, such as SNS, Blogs, and Gourmet search services.

・ Applications for Android™ smartphones under au brand expanded largely from late November, 2010. Contents common in au mobile phones such as “LISMO” music service, “au Smart Sports” sports support service, “au one GREE” mobile SNS service, and “au one Brand Garden” fashion online shopping site became available at Android™ smartphones.

・ “LISMO Book Store,” ebooks distribution service for “biblio Leaf SP02” became available from December 25, 2010.

Others

・ On December 1, 2010, the Group opened “au NAGOYA,” the first flagship shop that allows users to experience the latest products and services at a showroom and offers proposals for products and services, applications and registrations of services.

・ As a part of full-fledged entry to mobile the data communication market, KDDI Corporation obtained 52.4% of Wire and Wireless Co., Ltd. (hereafter: “Wi2”) shares by subscribing to an allocation of new shares to a third party on October 22, 2010, to strengthen Wi-Fi business, making Wi2 into a consolidated subsidiary. Wi2 is involved in constructing a Wi-Fi environment to allow a wide range of customers use various Wi-Fi mounted devices by tying up with different partners. KDDI Corporation and Wi2 intend to provide a comfortable wireless broadband environment and create new broadband service to further enrich customers’ lifestyles.

・ KDDI Corporation signed a definitive agreement to acquire KKBOX Inc. (hereafter: “KKBOX”), the digital music subscription service provider in Taiwan, from Skysoft Inc. which currently owns 100% share of the company on December 15, 2010. KDDI Corporation purchased 76.0% shareholdings in KKBOX on

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December 27, 2010, and KKBOX became a consolidated subsidiary of the Group. Through this acquisition, the Group aims to provide new contents service for smartphone users by utilizing the service delivery platform and know-how of KKBOX. The Group also intends to enter into the Chinese market through the business platform already established by KKBOX in the region.

Main Services in the Fourth Quarter and Beyond

・ The Group plans to introduce “SMT-i9100,” a tablet type internet terminal with Wi-Fi function to be used at home and outside, after late February, 2011. “SMT-i9100” features the latest Android™ OS 2.2 to allow users enjoy Flash® contents just like a PC.

・ The Group plans to introduce “Kaigai Double-Teigaku,” a flat-rate packet service, to allow customers comfortably use au mobile phones and smartphones that involve large data communication in foreign countries starting March, 2011.

Fixed-line Business Operating revenues for the nine months ended December 31, 2010 amounted to ¥660,032 million, 5.8% increase year on year, due to the increase in revenues of group companies, which offset the decline in voice revenue of KDDI Corporation. The decline in operating expenses of KDDI Corporation led the Fixed-line Business to post an operating profit of ¥6,838 million, showing turnaround from operating loss. Operating revenues for the three months ended December 31, 2010 amounted to ¥221,548 million, 6.1% increase year on year, due to the increase in revenues of group companies, which offset the decline in voice revenue of KDDI Corporation. The decline in operating expenses of KDDI Corporation led the Fixed-line Business to post an operating profit of ¥10,507 million.

Overall

・ The number of FTTH service subscriptions, consisting of “au HIKARI” and services of consolidated subsidiaries (Chubu Telecommunications Co., Inc.’s “Commuf@-hikari,” Okinawa Cellular Telephone Company’s “au HIKARI Chura” and Okinawa Telecommunication Network Co., Inc.’s “Hikarifuru”) reached 1.833 million as of December 31, 2010. (Subscription of “Commuf@-hikari” topped 0.4 million on November 9, 2010.)

・ As of December 31, 2010, the number of “Metal-plus” subscriptions totaled 2.622 million. ・ For “Cable-plus phone,” alliances with cable television companies grew steadily, reaching 103 companies

and its subscriptions expanded to 1.250 million as of December 31, 2010. ・ Consolidated subsidiary JCN Group, which oversees 19 cable companies primarily in the Tokyo

metropolitan area, had 1.065 million cable television subscriptions as of December 31, 2010.

Consumer Services

・ The Group began offering a rental service of “Power Line Communication Modem,” a hybrid type home wired LAN modem to customers of “au HIKARI” and “au HIKARI Chura” on November 24, 2010. The service allows users to easily build a high-speed communication environment by using power outlet and TV outlet (TV coaxial outlet) instead of running LAN cables around the house.

・ The Group began offering 3D contents for “MOVIE SPLASH VOD service,” which is provided by “Video Channel Service” of “au HIKARI,” and by cable television stations under alliance on November 1, 2010, to allow users to enjoy more entertaining videos. The Group intends to offer various 3D contents including music, entertainment and TV star programs.

Corporate Services

・ J.D Power Asia Pacific, Inc., conducted a “J.D.Power Asia Pacific 2010 Japan Network Service Satisfaction StudySM <Large Enterprise Market>,” which ranked KDDI Corporation’s network service as the number one service for two consecutive years. Of five factors including “customer correspondence by sales representatives,” “network construction process,” “trouble shooting at the time of system failure and trouble” “service contents/quality,” and “cost,” KDDI Corporation won number one position for four factors. Chubu Telecommunications Co., Inc., a Group subsidiary, has won number one position for all five factors of <Small and Medium Business Market> in the same study, obtaining the top position in overall satisfaction ranking of the same study for five consecutive years since 2006.

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Main Services in the Fourth Quarter and Beyond

・ KDDI Corporation will start offering “KDDI Flexible Service,” a next-generation service with high quality and high reliability to corporate customers from April 1, 2011. KDDI Corporation will start accepting registrations for the service from February 1, 2011. The service realizes to avoid delay in the entire network by combining the best transmission paths. Various menus such as multiplex access options that enable integration of communication with multiple areas will also be available.

Other Business Operating revenues for the nine months ended December 31, 2010 increased 11.9% year on year to ¥84,044 million. Operating income increased 71.8% year on year to ¥5,328 million. Operating revenues for the three months ended December 31, 2010 decreased 18.0% year on year to ¥26,566 million. Operating income decreased 20.5% year on year to ¥1,725 million.

3) Status of Major Affiliates UQ Communications Inc. (hereafter: “UQ”), an equity method affiliate of the Group, has recorded 524,400 subscriptions and 13,014 base stations as of December 31, 2010. To respond to customers’ request to use the service at a more reasonable price for longer term, the company started offering new pricing plan “UQ Flat Yearly Passport” from November 16, 2010. “UQ Flat Yearly Passport” is a plan where customers pay a monthly flat fee of 3,880 yen (including tax) with a contract term of at least one year subscription. The service suits customers who use fast-speed mobile internet frequently and continuously to enjoy mobile broadband world including videos, music and games. Jibun Bank Corporation (hereafter: “Jibun Bank”), an equity method affiliate of the Group, has renewed “Jibun loan” card loan service on October 12, 2010, to allow customers without an account at Jibun Bank to apply and receive loans. Foreign currency deposit service via PCs started from November 14, 2010, to allow customers to make transactions for 24 hours by principle to best suit customers’ usage conditions. Banking services for smartphones and a Jibun Bank application for IS03 were offered from December 16, 2010. Jibun Bank aims to make further efforts to expand its services to improve customer convenience. KDDI Corporation and Microfinance International Corporation (hereafter: “MFIC”), a US financial solution provider, agreed on a partnership involving KDDI Corporation's US$22.05 million investment in MFIC to support its global expansion. Through the investment on December 8, 2010, KDDI Corporation obtained 22.9% of MFIC’s preferred shares (with an agreement of 20% voting rights) by subscribing for an allocation of new shares to a third party. Under the alliance, the Group's subsidiary Locus Telecommunications Inc. launched a new service in the U.S. to allow customers to send money overseas using a multi-purpose calling card in January 2011.

Notes: 1. “Android” is a trademark of Google Inc. 2. “REGZA” is a registered trademark of Toshiba Corporation. 3. “EXILIM-Keitai” and “G’zOne” are registered trademarks of Casio Computer Co., Ltd. 4. “AQUOS SHOT” is a registered trademark of Sharp Corporation. 5. “BRAVIA” and “Cyber-shot” are registered trademarks of Sony Corporation. 6. “Windows®” is a trademark or a registered trademark of Microsoft Corporation in the United States, Japan and

other countries. 7. Skype is a trademark of Skype Limited. 8. “BREW®” and trademarks associated with BREW® are trademarks or registered trademarks of QUALCOMM

Incorporated. 9. “Wi-Fi” is a registered trademark of Wi-Fi Alliance®. 10. “Flash®” is a trademark or a registered trademark of Adobe Systems Incorporated in the United States and other

countries. 11. WiMAX is a registered trademark of WiMAX Forum.

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(2) Qualitative Information on Consolidated Financial Position

1) Financial Condition Consolidated total assets as of December 31, 2010 stood at ¥3,741,567 million, a decrease of ¥77,968 million from March 31, 2010. This decrease was primarily attributable to factors such as decreases in noncurrent assets in telecommunication business and short-term investment securities. Total liabilities amounted to ¥1,614,878 million, a decline of ¥126,207 million from March 31, 2010. Major factors contributing to this decline were decreases in short-term loans payable and accounts payable-other. An increase in retained earnings and a decline in purchase of own shares resulted net asset to amount to ¥2,126,689 million. As a result, the shareholders' equity ratio rose from 52.8% as of March 31, 2010, to 55.1%. 2) Cash Flow Conditions The following describes the cash flow situation for the nine months ended December 31, 2010.

(Amount unit: Millions of yen) Nine months ended

December 31, 2009Nine months ended December 31, 2010

Increase (Decrease)

Net cash provided by (used in) operating activities 548,878 534,470 (14,408)Net cash provided by (used in) investing activities (417,216) (312,925) 104,290Free cash flows 131,662 221,545 89,882Net cash provided by (used in) financing activities (106,313) (270,792) (164,478)Effect of exchange rate change on cash and cash equivalents

139 (1,937) (2,077)

Net increase (decrease) in cash and cash equivalents 25,489 (51,184) (76,673)Cash and cash equivalents at beginning of period 200,310 165,476 (34,833)Cash and cash equivalents at end of period 225,800 114,292 (111,507)

Note: Free cash flows are calculated as the sum of “net cash provided by (used in) operating activities” and “net cash provided by (used in) investing activities.”

Operating activities provided net cash of ¥534,470 million largely due to ¥355,603 million of income before income taxes and minority interests, ¥330,942 million of depreciation and amortization, and ¥143,912 million of income taxes paid. Investing activities used net cash of ¥312,925 million mainly due to ¥244,387 million in payments for purchase of property, plant and equipment and ¥59,262 million in payments for purchase of intangible assets. Financial activities used net cash of ¥270,792 million largely due to ¥50,000 million in proceeds from long-term loans, ¥99,547 million in payments to short-term loans and ¥89,059 million in purchase of own shares. As a result, total amount of net cash and cash equivalents as of December 31, 2010, decreased ¥ 51,184 million from March 31, 2010, to ¥ 114,292 million.

(3) Qualitative Information on Consolidated Operating Results Forecast

1. Outlook for the Fiscal Year Ending March 31, 2011

Overview ・ The Group is strengthening its business foundation to by responding the rapid changes in its operating

environment in order to achieve sustainable growth. ・ The Group will strive to be No.1 in customer satisfaction in all services and tackle the challenge of new

value creation. ・ The Group, by promoting more assertively total customer satisfaction (TCS) activities in order to raise

satisfaction among all stakeholders, will endeavor to boost corporate value further and strengthen its brand competitiveness.

・ Regarding information security, the Group will pursue extensive information management and compliance, and promote adoption of a more robust risk management structure.

・ With an emphasis on harmony with the natural environment, the Group will contribute to the creation of

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a more humane and prosperous society through vigorous environmental conservation activities, including energy and resource conservation, recycling, and ‘green’ purchasing.

・ The Group has positioned support for all socioeconomic activities through the provision of safe and secure information and communications services as the principle underlying its CSR activities, and will work from this vantage to actively contribute to a prosperous communications society.

Mobile Business In a bid to lift the level of customer satisfaction even higher, the Group will take steps to expand its business domains while pushing to strengthen overall product appeal and deliver a more secure mobile environment than ever before. To this end, the Group will develop and offer a lineup of various terminals including smartphones with standard functions common in Japan to strengthen communication function, data telecommunication terminals, tablet-type terminals, and Wi-Fi routers, as well as advanced new services and new contents that match customers’ diverse needs. With respect to corporate clients, the Group will develop and provide converged services of the areas of mobile and fixed-line telecommunications, and other offerings, in an effort to improve customer convenience.

Fixed-line Business Along with efforts to promote sales of the “au HIKARI”, “au HIKARI Chura” and “Commuf@-hikari” FTTH services, the Group will seek ties with cable television companies with the goal of expanding its access lines, including for “Cable-plus phone” and cable television services. With respect to corporate clients, the Group, guided by the slogan “Maximize Your Corporate Strength,” will assist clients in developing their businesses anywhere in the world using data centers as a core leverage point to offer services that encompass everything from network lines and IT equipment to sophisticated operation and maintenance services.

Full-Year Results The estimated consolidated financial results for the year ending March 2011 for full-year basis disclosed in the Financial Statements Summary for the year ended March 2010 were as follows; Operating Revenues: ¥3,440,000 million, Operating Income: ¥445,000 million, Ordinary Income: ¥420,000 million, Net Income: ¥240,000 million. There is no change to these figures.

2. Business Risks

As the Group pursues its business, there are various risks involved. The Group takes every effort to reduce these risks by preventing and hedging them. However, there are various uncertainties which could have negative impacts on the Group’s brand image, liability, financial position and/or earnings performance such as; - subscription growth trends out of line with the Group expectations due to competition, rival technologies and

rapid market shifts - breach of obligations regarding communications security and protection of customer privacy - revision or repeal of laws and ordinances governing telecommunications, together with related government

policies - general legal and regulatory, litigation and patents, personnel retention and training, retirement benefits,

asset-impairment accounting, telecommunications sector consolidation and business restructuring in the Group

2. Others

(1) Changes in Significant Consolidated Subsidiaries None

(2) Application of Accounting Methods which are Simplified or Exceptional for Consolidated Financial Statements

1) Simplified accounting methods i. Valuation of inventories

The Group omits physical stocktaking of inventories and calculated inventories as of December 31, 2010 by a reasonable method based on the actual inventories as of September 30, 2010.

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ii. Calculation of depreciation expense for noncurrent asset The depreciation expense for noncurrent assets that are depreciated by the declining-balance method is calculated by proportionally allocating the depreciation expense for the consolidated fiscal year.

iii. Calculation of income taxes, deferred tax assets and deferred tax liabilities The collectability of deferred tax assets is determined based on the future earnings projections and tax planning used in the previous fiscal year, when the business environment and temporary differences are not considered to have changed significantly from the end of the previous fiscal year.

2) Exceptional accounting method for quarterly consolidated financial statements None

(3) Outline of Changes in Significant Accounting Policies, Procedures and Presentation 1. Changes in accounting standard

1) Application of “Accounting Standard for Equity Method of Accounting for Investment” and “Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method”From the first quarter of the fiscal year ending March 31, 2011, the Group applies the “Accounting Standard for Equity Method of Accounting for Investment” (Accounting Standards Board of Japan [ASBJ] Statement No. 16 of March 10, 2008) and the “Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method” (ASBJ PITF No. 24 of March 10, 2008). There is no impact on the Group’s consolidated financial statements for quarter as a result of this change.

2) Application of “Accounting Standard for Asset Retirement Obligations” From the first quarter of the fiscal year ending March 31, 2011, the Group applies the “Accounting Standard for Asset Retirement Obligations” (ASBJ Statement No. 18 of March 31, 2008) and the “Guidance on Accounting Standard for Asset Retirement Obligations” (ASBJ Guidance No. 21 of March 31, 2008). There is no significant impact on the Group’s consolidated financial statements for the quarter as a result of this change.

3) Application of “Accounting Standard for Business Combinations” and others From the first quarter of the fiscal year ending March 31, 2011, the Group began applying the “Accounting Standard for Business Combinations” (ASBJ Statement No. 21 of December 26, 2008), the “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22 of December 26, 2008), the “Partial amendments to Accounting Standard for Research and Development Costs” (ASBJ Statement No. 23 of December 26, 2008), the “Revised Accounting Standard for Business Divestitures” (ASBJ Statement No. 7 of December 26, 2008), the “Revised Accounting Standard for Equity Method of Accounting for Investments” (ASBJ Statement No. 16 of December 26, 2008), and the “Revised Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10 of December 26, 2008).

2. Changes in presentation Based on the “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22 of December 26, 2008), the Group applies the “Cabinet Office Ordinance Partially Revising Regulation on Terminology, Forms and Preparation of Financial Statements” (Cabinet Office Ordinance No.5, March 24, 2009). As a result, “Income before minority interests” is included in the consolidated financial statements for the nine months ended December 31, 2010 and the three months ended December 31, 2010.

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3. Consolidated Financial Statements(1) Consolidated Balance Sheets

AssetsNoncurrent assets

Noncurrent assets-telecommunications businessProperty, plant and equipment

Machinery, net 672,159 686,592Antenna facilities, net 349,382 326,252Local line facilities, net 140,123 130,047Long-distance line facilities, net 12,782 15,667Engineering facilities, net 32,129 33,353Submarine line facilities, net 10,292 12,081Buildings, net 218,200 227,011Structures, net 32,379 31,757Land 242,207 240,746Construction in progress 61,995 84,087Other tangible assets, net 35,259 40,073Total property, plant and equipment 1,806,911 1,827,672

Intangible assetsRight of using facilities 8,466 7,368Software 202,684 221,785Goodwill 20,321 24,411Other intangible assets 8,219 8,445Total intangible assets 239,691 262,010

Total noncurrent assets-telecommunications business 2,046,603 2,089,683Incidental business facilities

Property, plant and equipment 115,010 113,374Intangible assets 63,805 60,733Total noncurrent assets-incidental business 178,816 174,108

Investments and other assetsInvestment securities 69,900 93,057Stocks of subsidiaries and affiliates 361,826 372,167Investments in capital of subsidiaries and affiliates 167 182Long-term prepaid expenses 81,114 79,878Deferred tax assets 96,538 100,392Lease and guarantee deposits 36,485 38,380Other investment and other assets 10,932 10,882Allowance for doubtful accounts (8,524) (8,576)Total investments and other assets 648,440 686,367

Total noncurrent assets 2,873,860 2,950,158Current assets

Cash and deposits 90,060 96,863Notes and accounts receivable-trade 548,269 536,309Accounts receivable-other 28,739 44,515Short-term investment securities 26,000 70,000Supplies 86,866 49,249Deferred tax assets 50,610 67,398Other current assets 50,456 18,751Allowance for doubtful accounts (13,295) (13,709)Total current assets 867,707 869,378

Total assets 3,741,567 3,819,536

(Amount unit: Millions of yen)

As of March 31, 2010As of December 31, 2010

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LiabilitiesNoncurrent liabilities

Bonds payable 414,976 374,968Long-term loans payable 498,945 497,775Provision for retirement benefits 19,114 18,542Provision for point card certificates 83,644 78,693Other noncurrent liabilities 38,170 34,178Total noncurrent liabilities 1,054,851 1,004,159

Current liabilitiesCurrent portion of noncurrent liabilities 61,777 111,941Notes and accounts payable-trade 117,580 66,553Short-term loans payable 1,489 101,166Accounts payable-other 201,906 250,517Accrued expenses 17,285 16,150Income taxes payable 43,515 67,856Advances received 73,901 74,608Provision for bonuses 9,714 18,975Other current liabilities 32,856 29,156Total current liabilities 560,026 736,927

Total liabilities 1,614,878 1,741,086Net assets

Shareholders' equityCapital stock 141,851 141,851Capital surplus 367,091 367,091Retained earnings 1,651,690 1,506,951Treasury stock (114,304) (25,244)Total shareholders' equity 2,046,329 1,990,650

Valuation and translation adjustmentsValuation difference on available-for-sale securities 26,348 34,326Deferred gains or losses on hedges (33) －

Foreign currency translation adjustment (11,664) (7,250)Total valuation and translation adjustments 14,649 27,076

Subscription rights to shares 1,471 1,606Minority interests 64,238 59,117Total net assets 2,126,689 2,078,450

Total liabilities and net assets 3,741,567 3,819,536

As of December 31, 2010 As of March 31, 2010


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(2) Consolidated Statements of Income (Nine Months)

Operating income and loss from telecommunicationsOperating revenue

Total operating revenue 1,987,201 1,898,492Operating expenses

Business expenses 523,210 487,426Operating expenses 189 86Facilities maintenance expenses 167,886 225,079Common expenses 1,336 1,744Administrative expenses 83,064 51,562Experiment and research expenses 6,388 5,263Depreciation 324,174 312,208Noncurrent assets retirement cost 16,656 10,281Communication facility fee 318,685 300,002Taxes and dues 27,515 27,853Total operating expenses 1,469,107 1,421,507

Net operating income from telecommunication 518,093 476,985Operating income and loss from incidental business

Operating revenue 598,106 673,363Operating expenses 739,386 778,298Net operating loss from incidental business (141,280) (104,935)

Operating income 376,812 372,050Non-operating income

Interest income 377 461Miscellaneous income 5,411 6,138Total non-operating income 5,789 6,600

Non-operating expensesInterest expenses 9,495 10,773Equity in losses of affiliates 6,505 12,713Miscellaneous expenses 3,773 5,491Total non-operating expenses 19,775 28,978

Ordinary income 362,826 349,672Extraordinary income

Gain on sales of noncurrent assets 269 1,187Gain on sales of investment securities 541 5,617Gain on negative goodwill － 364Reversal of allowance for doubtful accounts 5,309 －

Gain on reversal of subscription rights to shares － 426Total extraordinary income 6,120 7,595

Extraordinary lossLoss on valuation of investment securities 204 368Loss on sales of stocks of subsidiaries and affiliates － 176

－ 1,120

Business restructuring expenses 2,310 －

Total extraordinary losses 2,514 1,665Income before income taxes and minority interests 366,432 355,603Income taxes-current 130,754 120,618

Loss on adjustment for changes of accountingstandard for asset retirement obligations




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Income taxes-deferred 18,804 26,272Total income taxes 149,558 146,890Income before minority interests － 208,713Minority interests in income 4,227 6,071Net income 212,645 202,641




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Consolidated Statements of Income (Three Months)

Operating income and loss from telecommunicationsOperating revenue

Total operating revenue 656,250 623,130Operating expenses

Business expenses 168,924 158,922Operating expenses 44 16Facilities maintenance expenses 55,398 72,691Common expenses 449 622Administrative expenses 27,234 16,716Experiment and research expenses 2,742 2,185Depreciation 112,089 107,888Noncurrent assets retirement cost 8,075 4,729Communication facility fee 106,963 97,101Taxes and dues 12,819 12,806Total operating expenses 494,743 473,679

Net operating income from telecommunication 161,506 149,451Operating income and loss from incidental business

Operating revenue 205,969 230,287Operating expenses 241,646 255,544Net operating loss from incidental business (35,676) (25,256)

Operating income 125,829 124,194Non-operating income

Interest income 93 187Miscellaneous income 2,229 1,843Total non-operating income 2,323 2,030

Non-operating expensesInterest expenses 3,092 3,472Equity in losses of affiliates 2,867 5,124Miscellaneous expenses 878 1,997Total non-operating expenses 6,838 10,594

Ordinary income 121,315 115,630Extraordinary income

Gain on sales of noncurrent assets 37 183Gain on sales of investment securities 221 0Gain on negative goodwill － 364Reversal of allowance for doubtful accounts 0 －

Gain on reversal of subscription rights to shares － 2Total extraordinary income 258 549

Extraordinary lossLoss on valuation of investment securities 3 (4)Business restructuring expenses 2,310 －

Total extraordinary losses 2,313 (4)Income before income taxes and minority interests 119,260 116,185Income taxes-current 48,793 34,980Income taxes-deferred 1,597 13,382Total income taxes 50,391 48,363Income before minority interests － 67,822Minority interests in income 1,515 2,154Net income 67,353 65,667




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(3) Consolidated Statements of Cash Flows

Net cash provided by (used in) operating activitiesIncome before income taxes and minority interests 366,432 355,603Depreciation and amortization 339,420 330,942Amortization of goodwill and negative goodwill 8,112 8,530Loss (gain) on sales of noncurrent assets (250) (1,179)Loss on retirement of noncurrent assets 13,282 7,145Business restructuring expenses 1,905 －

Increase (decrease) in allowance for doubtful accounts (4,289) (299)Increase (decrease) in provision for retirement benefits 599 482Interest and dividends income (1,472) (1,767)Interest expenses 9,495 10,773Equity in (earnings) losses of affiliates 6,505 12,713Loss (gain) on sales of investment securities (541) (5,679)Loss (gain) on sales of stocks of subsidiaries and affiliates － 176Loss (gain) on valuation of investment securities 204 368Increase (decrease) in provision for point card certificates 12,869 4,944Decrease (increase) in prepaid pension costs 2,930 1,191Decrease (increase) in notes and accounts receivable-trade (26,463) 1,687Decrease (increase) in inventories 19,755 (37,868)Increase (decrease) in notes and accounts payable-trade 34,115 50,991Increase (decrease) in accounts payable-other (20,809) (30,086)Increase (decrease) in accrued expenses 1,909 1,354Increase (decrease) in advances received 6,225 812Other, net (17,546) (26,225)Subtotal 752,392 684,613Interest and dividends income received 3,117 4,443Interest expenses paid (9,033) (10,674)Income taxes paid (197,596) (143,912)Net cash provided by (used in) operating activities 548,878 534,470

Net cash provided by (used in) investing activitiesPurchase of property, plant and equipment (279,264) (244,387)Proceeds from sales of property, plant and equipment 312 1,262Purchase of intangible assets (85,141) (59,262)Purchase of investment securities (280) (861)Proceeds from sales of investment securities 744 15,811Purchase of stocks of subsidiaries and affiliates (22,818) (3,578)Purchase of investments in subsidiaries and affiliatesresulting in change in scope of consolidation (17,090) (5,339)

Proceeds from purchase of investments in subsidiaries andaffiliates resulting in change in scope of consolidation 2,202 －

Payments for sales of investments in subsidiaries andaffiliates resulting in change in scope of consolidation － (904)

Purchase of long-term prepaid expenses (17,293) (15,900)Other, net 1,413 234Net cash provided by (used in) investing activities (417,216) (312,925)




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Net cash provided by (used in) financing activitiesNet increase (decrease) in short-term loans payable (80,616) (99,547)Proceeds from long-term loans payable 29,500 50,000Repayment of long-term loans payable (28,930) (17,020)Proceeds from issuance of bonds 50,000 40,000Redemption of bonds (19,800) (83,000)Purchase of treasury stock － (89,059)Cash dividends paid (52,968) (57,414)Cash dividends paid to minority shareholders (1,038) (1,081)Proceeds from stock issuance to minority shareholders － 979Other, net (2,460) (14,648)Net cash provided by (used in) financing activities (106,313) (270,792)

Effect of exchange rate change on cash and cash equivalents 139 (1,937)Net increase (decrease) in cash and cash equivalents 25,489 (51,184)Cash and cash equivalents at beginning of period 200,310 165,476Cash and cash equivalents at end of period 225,800 114,292




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(4) Going Concern Assumption None

(5) Segment Information

[Business segment information] For the three months ended December 31, 2009 (October 1, 2009 to December 31, 2009)


Mobile Business

Fixed-line Business

Other Business Total

Elimination and

Corporate Consoli- dation

Sales and Operating Income (Loss) Sales

1) Outside Sales 659,966 187,711 14,542 862,220 － 862,2202) Intersegment Sales 3,538 21,194 17,868 42,601 (42,601) －

Total 663,505 208,905 32,410 904,821 (42,601) 862,220Operating Expenses 527,628 221,379 30,241 779,249 (42,858) 736,390Operating Income (Loss) 135,876 (12,473) 2,169 125,572 257 125,829

For the nine months ended December 31, 2009 (April 1, 2009 to December 31, 2009)


Mobile Business

Fixed-line Business

Other Business Total

Elimination and

Corporate Consoli- dation

Sales and Operating Income (Loss) Sales

1) Outside Sales 1,991,220 559,481 34,605 2,585,307 － 2,585,3072) Intersegment Sales 10,159 64,277 40,488 114,924 (114,924) －

Total 2,001,379 623,759 75,093 2,700,232 (114,924) 2,585,307Operating Expenses 1,593,468 658,551 71,992 2,324,011 (115,517) 2,208,494Operating Income (Loss) 407,911 (34,791) 3,100 376,220 592 376,812

Note: Business segments and principal services/operations of each segment

Business Segment Principal Services/Operations Mobile Business Mobile phone services, sales of mobile phone handsets, mobile solutions services

Fixed-line Business Local, long-distance, and international telecommunications services, internet services, solutions services, data center services, cable television services

Other Business Call center business, content business, research and advanced development, and other mobile phone services, etc.

[Geographic segment information] For the three months ended December 31, 2009 (October 1, 2009 to December 31, 2009) and the nine months ended December 31, 2009 (April 1, 2009 to December 31, 2009)

Information by geographic segment is not shown since net sales in Japan accounted for over 90% of total net sales in all business segments.

[Net sales from overseas operations] For the three months ended December 31, 2009 (October 1, 2009 to December 31, 2009) and the nine months ended December 31, 2009 (April 1, 2009 to December 31, 2009)

Net sales from overseas operations are not shown since they account for less than 10% of consolidated net sales.

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Additional Information From the three months ended June 30, 2010, the Group applies the “Revised Accounting Standard for Disclosures about Segments of an Enterprise and Related information” (ASBJ Statement No. 17 of March 27, 2009) and “Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20 of March 21, 2009).

1. Outline of business segments reported

The business segments the Group reports are the business units for which the Company is able to obtain respective financial information separately in order for the Board of Directors, etc. to conduct periodic investigation to determine distribution of management resources and evaluate their business results. As the Group is a comprehensive telecommunications company combining mobile and fixed-line communications in a single company, its business segments reported comprise of the “Mobile Business” and the “Fixed-line Business.” The Mobile Business provides mobile services (voice and data service), sales of mobile phone handsets and content and other services. The Fixed-Line Business provides various fixed-line communications services, including broadband services centering in FTTH and CATV access lines, long distance and international telecommunications services. In addition, the Group offers data center services and various ICT solutions services outside of Japan.

2. Information on sales and income (loss) by business segment reported

For the nine months ended December 31, 2010 (April 1, 2010 to December 31, 2010) (Amount unit: Millions of yen)

Business segments reported

Mobile Business

Fixed-line Business

Subtotal

Other Business 1 Total Adjustment 2

Consolidated Statements of

Income 3

Sales Outside Sales 1,944,355 591,392 2,535,748 36,107 2,571,856 － 2,571,856Intersegment Sales or Transfer

7,971 68,639 76,611 47,937 124,548 (124,548) －

Total 1,952,327 660,032 2,612,359 84,044 2,696,404 (124,548) 2,571,856Operating Income 359,603 6,838 366,441 5,328 371,770 280 372,050

For the three months ended December 31, 2010 (October 1, 2010 to December 31, 2010) (Amount unit: Millions of yen)

Business segments reported

Mobile Business

Fixed-line Business

Subtotal

Other Business 1 Total Adjustment 2

Consolidated Statements of

Income 3

Sales Outside Sales 644,426 197,785 842,211 11,207 853,418 － 853,418Intersegment Sales or Transfer

2,745 23,763 26,508 15,359 41,867 (41,867) －

Total 647,171 221,548 868,719 26,566 895,286 (41,867) 853,418Operating Income 111,937 10,507 122,445 1,725 124,170 24 124,194

Notes: 1. The “Other Business” category incorporates operations not included in business segments reported, including

call center business, research and technological development, and other operations. 2. Adjustment of segment income (loss) refers to elimination of intersegment transactions. 3. Operating income (loss) for segment is adjusted on operating income on the quarterly consolidated statements

of income.

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3. Information concerning impairment loss from noncurrent assets, goodwill and other items by business

segment (Material impairment loss from noncurrent assets)

None

(Material changes in goodwill) None

(Material profit from negative goodwill) None

(6) Material Changes in Shareholders’ Equity

KDDI purchased 185,589 shares of treasury stock at 89,059 million yen for the three months ended December 31, 2010, according to the board of directors meeting decision on October 22, 2010. As of December 31, 2010, KDDI possessed 216,294 shares of treasury stock, or 114,304 million yen.

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